SGR: Kenyans To Pay KSh 14b More In January 2024 Loan Settlement As Shilling Declines Further

• Standard Gauge Railway (SGR) loan repayment for January 2024 grew by KSh 14 billion due to the weakening shilling
• World Bank reported that Kenya is scheduled to pay $536.9 million (KSh 84.7 billion), compared to KSh 70.2 billion paid during a similar period in 2023
• This followed a further decline in the shilling against the US dollar, currently exchanging at KSh 157 per dollar

TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Kenyan taxpayers will be hard-hit by the Standard Gauge Railway (SGR) loan repayment in January 2024 as the shilling continues to weaken.

According to a World Bank report, SGR's debt service for January 2024 amounted to $536.9 million (KSh 84.7 billion, based on the current exchange rate of KSh 157 per US dollar).

How weakening shilling is hurting Kenya's debt payment

The amount increased by KSh 14 billion compared to the payment of $564.53 million (KSh 70.2 billion based on the prevailing exchange rate) in January 2023.

In an exclusive interview with TUKO.co.ke, Market Analyst at FXPesa Kenya and Senior Contributor at Forbes Rufas Kamau, explained that the shilling declined by 27.36% against the dollar in the past year, down from the rate of KSh 123.55 in January 2023.

"Considering that this is a US election year, if the US reverts to lower rates and quantitative easing, the shilling could stabilise. However, this seems unlikely since our trade deficit is worsening and foreign direct investments have slumped," noted Kamau.

How much is the SGR loan?

Kenya borrowed $5.08 billion (KSh 801.1 billion) from China between 2014 and 2015 to finance the construction of the SGR from Mombasa to Naivasha.

The SGR debt servicing kicked off in January 2020.

Data from the National Treasury indicated that the debt repayment increased by about half to KSh 107.42 billion in the year 2022/23.

This was a 46.19% increase from KSh 73.48 billion in repayment reported during the previous financial year.

Why are Kenyans still paying SGR loan?

This followed controversial reports from Busia Senator Okiya Omtatah, who claimed that Kenyans fully funded the SGR to the tune of KSh 900 billion.

Omtatah lifted the lid on the bloated costs and other shady moves behind the SGR deal secrecy.

The senator asked why Kenyans are still servicing the loan, which did not finance the SGR project.